The South Korean Chaebol System And Its Impact On Countrys Economy Free Essay Example, 2000 words

Emerged due to favorable import license concessions, access to scarce foreign exchange and governmental properties seized from the Japanese formed part of the Korean state policy. Samsung, Korea s oldest chaebol, and the four other biggest conglomerates were established during this period. It was in the 1960s when the chaebols forged its strong partnership with the government. The Korean government identified talented entrepreneurs and systematically sponsored them by credit, trading licenses, tax advantages, and other measures. 73) The nature of this alliance between the state and the chaebols is fundamental in the Korean impressive economic performance seen from thereon. The government support, encouragement, and intervention resulted to what was called as the guided economic development wherein the government involvement enabled chaebols to monopolize spheres of activity and accumulate capital in order to finance diversification of production. According to Kong, democratization a nd economic liberalization policies did not break the interdependence of state and chaebols and that it even had the effect of strengthening the chaebols and generating new forms of collusion. 19) By the 1980s the top ten chaebols alone held 25 percent of Korea s manufacturing industry and the country s economy became heavily dependent on these huge conglomerates as chaebols expand and developed sectors such as shipbuilding, heavy engineering, consumer electronics and, more recently, automobiles. We will write a custom essay sample on The South Korean Chaebol System And Its Impact On Country's Economy or any topic specifically for you Only $17.96 $11.86/pageorder now 35) (See Appendix 2)An underlying issue in regard to the chaebol-government alliance is the fact that such relationship has been institutionalized, characterized by political and legal foundations. It underscores how the economic sector in Korea is integrated into the political sphere or vice versa. This is highlighted, for instance in the way chaebols gain the advantage, say, in the aspect of competition. Chaebol as a favored player by the government in important industries such as the heavy and chemical industries enjoyed oligopoly rents and received preferential policy loans at subsidized interest rates. Ideally, bigger chaebol, with good track records, was regarded as much more reliable than small/medium size enterprises, by bureaucrats who were afraid of risk and preferred visible quantitative growth. (Lee 1997, p. 38)